It is an honor and a pleasure to be here among
so many good friends and great minds.

I feel a special affinity for Zurich. It was
the home of my friend and inspiration Ferdi
Lips. It is the home of other friends like Tony Deden.

It was also the ancestral home of the Landis
family.

In fact, this ancestral tie makes me a little
nervous at the prospect of a question and answer session. The
last time a Landis preaching a dissident message was questioned
in Zurich, it was while he was stretched out on the rack. His
answers irritated his questioners. So they cut off his head.

Hans Landis was a radical Protestant who denied
the authority of the Pope and preached strict fundamentalism.
In the passions of the early 1600s, that was like being
a gold bug who denies the legitimacy of the central bank and
preaches sound money.

And so, as I stand before you this evening,
I sincerely hope that over the course of the last four hundred
years, Zurich has mellowed out.

Tonight Im going to approach the subject
of gold from a somewhat oblique angle. Please bear with me as
I circle in on it.

Just over a year ago, the United States underwent
a seemingly radical change, seemingly overnight. Its financial
system had been revealed as insolvent under the weight of huge
liabilities and worthless assets. The government refused to allow
all the bankrupt institutions to fail, and thus permit the market
to do its job of purging the rot from the system.

Instead, the authorities saved their favorites,
effectively merging bank with state. They did so under cover
of a witches brew of subsidies, guarantees and quasi-nationalizations
bearing bizarre acronyms like TARP; PDCF; TAF; TSLF; and my personal
favorite, the ABCPMMFLF, otherwise known as the Asset-Backed
Commercial Paper Money Market Fund Liquidity Facility.

And those were just the visible programs.
The Fed, our central bank, dropped interest rates to zero and
monetized additional trillions of dollars worth of problem assets,
away from prying eyes. The nature and source of these assets
remain matters of speculation, because the Fed to this day refuses
to tell us what it bought and from whom.

When the smoke cleared, we Americans found
ourselves the subjects of a gangster state, in thrall to a clutch
of greedy, corrupt and incompetent banks which only days before
had failed. We were now the guarantors of trillions of dollars
in worthless assets that had generated billions in profits for
those same banks in recent years. Their gains remained their
gains; but their losses were now our losses. Our money, the reserve
currency of the world, was now backed by toxic waste.

The events of last fall were, to all appearances,
a bloodless coup, taking us from freedom to fascism virtually
overnight. And all without a shot fired, or even, with few exceptions,
an authoritative voice raised in protest.

How was such a thing possible in the United
States, the supposed bastion of free market capitalism? The nation
that had led the free world in the defeat of fascism some sixty
years earlier, and in the defeat of Marxism-Leninism less than
20 years earlier?

And more importantly, how do we get out of
this mess?

To understand how we got here, we must first
understand that what seemed like major change, was actually just
the illumination of existing reality. Bank and state had been
a unitary phenomenon for many years. And what seemed abrupt,
was actually the outcome of a gradual, accretive process.

Ideas have consequences, and bad ideas have
bad consequences. What happened last fall can be seen as the
aftermath of a war of ideas fought long ago, in which the wrong
side won, decisively.

The vanquished were the heirs of a noble intellectual
tradition, the English empiricist philosophers who developed
in the modern era the concepts of private property and voluntary
exchange. This tradition, which informed, among other things,
the United States Constitution, was reinvigorated in the late
nineteenth century by a remarkable succession of economists originally
based in Vienna, hence the term Austrian School of
economics. The Austrians, whose greatest exponent was Ludwig
von Mises, and whose American voice was Murray Rothbard, developed
a theory of economics based entirely on individual choice.

The victors were the heirs of a far less noble
tradition, a long line of intellectual quacks and panderers to
power. The line began with a Scotsman, John Law, reached a vigorous
maturity in an Englishman, John Maynard Keynes, and entered a
final, flamboyant decrepitude in the policies, if not the public
posturing, of former Fed Chairman Alan Greenspan. In this tradition,
the relevant analytic units are aggregates, broad abstractions.
The individual scarcely warrants mention. Public power, not private
property, is the heart of this tradition.

Keynesian economics is just a modern mutation
of inflationism, a stealth tax levied by powerful insiders on
ordinary people who cant see it happening until it is too
late. It is music to the ears of interventionist governments,
because it ratifies what, if unchecked, they will do anyway,
and it preys on the greed and gullibility of its victims, who
are more than willing to believe you can get something for nothing.

Now I must concede, as a matter of historical
fact, Ive overdrawn the point. It wasnt much of a
fight, much less a war. The quacks had the field to themselves.
They told powerful people what they wanted to hear, validating
the intervention and deficit spending that was already occurring.
They also had a head start of some 20 years, since it was not
until relatively late in the day when the Austrians theories
were even translated into English.

Nevertheless, I believe the events of last
fall, and the road ahead, can best be understood in terms of
the interplay between these two schools of economic thought.

Now, a detailed comparison of the two schools
is just a bit beyond us this evening. But there are two contrasting
theories that Id like to mention briefly.

The first such contrast is the theory of depressions.
In Austrian teaching, so-called business cycles are caused by
official interference with money and credit creation. This interference
 for example, setting interest rates below market 
fools individual actors into overproducing, creating supply that
exceeds actual demand. A depression is merely the process of
clearing the resulting imbalance. It is inevitable, and it is
necessary. Left to itself, the market will clear the excess of
supply over demand through price adjustments. Government at this
point has no role to play; it has done quite enough already.

In Keynesian teaching, by contrast, government
is blameless in the business cycle, which just occurs naturally.
In a depression, markets cant be trusted to clear themselves
through price adjustment. The government must step in and stimulate
additional demand by means of deficit spending, more money creation,
and more credit expansion.

The policy responses of last fall illustrate
perfectly Keynesian doctrine in action. Our authorities refused
to let the markets clear. Instead, they panicked, and attempted
to prop up prices, reignite the credit expansion, and stimulate
demand. All this is obvious to anyone who follows the news.

What is less obvious is how the crisis came
about. Keynesians treat it like an act of God. Virtually no one
in authority saw it coming. Applying Austrian theory, we see
that the crisis was caused by Government intervention, decades
of relentless credit expansion. It was entirely predictable.
And, indeed, it was predicted. The nature and timing of the inevitable
crash were endlessly debated for years all over the Internet
by ordinary people unburdened by false doctrine.

A more important question, however, is why
we tolerate unaccountable power in government. Why do we find
it acceptable that government has the power to intervene so massively
in the market that it can cause such a crisis in the first place?
And why do we now tolerate more of the same, a putative cure
that is doing even more damage?

This brings us to the other contrasting theory,
the concept of money itself.

In Austrian teaching, money originates in
the market: all money has originated, and must originate,
in a useful commodity chosen by the free market as a medium of
exchange. The unit of money is basically just a unit of weight
of the monetary commodity  usually a metal, such as gold
or silver. Government has no role in the definition or selection
of money, let alone its creation, price or quantity. That is
the markets function.

In Keynesian theory, by contrast, money originates
in the state. Government has a total monopoly on money, starting
with its very definition. It is not chosen in free exchange,
it is imposed by force.

Keynes got his idea for state control of the
means of exchange in the writings of a Prussian academic named
Friedrich Knapp. Herr Knapp was the author of a book entitled
the State Theory of Money, published in 1905.

According to Knapps theory, money is
a creature of law, of state power. Money is whatever the state
is willing to accept as payment for its taxes. It derives its
value exclusively from the state.

Keynes was so delighted with the State
Theory of Money that in 1924 he sponsored its first translation
into English. In 1930, he adopted it explicitly in his Treatise
on Money.

Now, it is a measure of the success of the
Keynesian indoctrination to which we have all been subjected
that this insidious theory strikes most people, even some who
fancy themselves free market in orientation, as unobjectionable.
They prefer to concentrate on other fallacies of Keynesian doctrine.
Many of us are so used to hearing that the state properly has
a monopoly on money that we have come to think it natural.

In fact, the State Theory was already defunct
long before Keynes appropriated it. It had been demolished in
theory as early as 1912 by Mises in his classic Theory of
Money and Credit. It had been discredited in practice by
its association with the German hyperinflation of the 1920s.
But inconvenient truth did not deter Lord Keynes. The State Theory
was quietly incorporated into Keynesian dogma without further
ado.

And there it sits, to this day, malignant
and unexamined, a false theoretical postulate at the foundation
of the entire corrupt edifice of inflationist theory and practice.

So why is this bit of intellectual history
relevant?

Because bad ideas have bad consequences.

The State Theory of money, the obscure foundation
of modern inflationism, left us intellectually defenseless against
our governments incremental shift to fiat money and away
from any practical limitations on its power.

It left us defenseless against the depredations
of our central bank, whose grotesque mispricing of money and
credit over the years led in a straight line to the catastrophic
serial bubbles in assets and credit whose threatened collapse
triggered the open interventions of last fall.

And, unless we drag it out into the open and
drive a stake through its heart, the State Theory will leave
us defenseless still as we grope for a way out. If our assumptions
are so flawed that we cannot properly articulate the conceptual
problem, we will never understand, let alone fix, the institutional
and behavioral problems.

Or, more to the point, defend ourselves against
the next wave of monetary swindles by powerful insiders.

And so we come to the second question: how
do we get out of this mess?

The short answer is, we dont. There
is no saving the dollar or the monetary system now based upon
it.

Not that we should want to. Absolute power,
Lord Acton famously observed, corrupts absolutely. The power
to print a reserve currency out of thin air is the greatest power
on Earth. Its very existence attracts and empowers people who
wish to control other people. It corrupts all who enjoy it.

You have had direct exposure to the truth
of this observation. Consider the relentless attacks on your
gold by our authorities, and the relentless attacks on your bank
secrecy laws by nearly everybody. The very same laws, ironically,
that were developed in the 1930s for the express purpose
of protecting clients who were nationals of fascist states.

I believe it fair to say that as a society,
we Americans have reached a dead end. We are bankrupt, and not
just financially. Our leading institutions are corrupt and discredited.
Our leadership class has betrayed its trust, openly and repeatedly.

Our financial and economic crisis will in
due course lead to an intellectual and cultural crisis. We may
yet avoid the fury and violence that have attended other paradigm
shifts, other imperial collapses. But we will need to be very
lucky indeed. Thats because on the one hand, this is about
power which will not be voluntarily relinquished, and on the
other, there is no reasoning with an angry mob.

So I believe it is a waste of time to talk
about reform of the existing monetary system. There is no historical
precedent for a fiat money surviving more than a brief span of
years; and, in any event, the experience of the Soviet Union
teaches that an economic system built upon a false dogma cannot
survive.

We should instead focus on regeneration, the
task of rebuilding out of the wreckage on the other side of that
final monetary collapse. At that time, and not before, we will
have the opportunity, however brief, to drive out these disastrous
ideas along with those who used them to control and impoverish
us. Only then will we have an opportunity, however long the odds,
to restore our Constitutional republic.

In the meantime, what keeps the current system
going?

You do.

You, meaning foreign investors, still lend
us your savings. This just enables us to prolong the process,
defer the resolution, and increase its ultimate cost.

When will it end?

Whenever you cut us off.

At some point, foreign holders will sell our
debt in earnest, and buy gold with a conviction resembling panic.

And so, finally, I come to gold. This is,
after all, a gold conference. Why then do I talk so much about
politics?

Because I think its impossible to understand
gold without understanding its political dimension. Gold is permanent,
natural money, the antithesis of money made from nothing, money
backed by force alone. It is a potent symbol of private property;
of voluntary exchange taking place outside the control of the
state; of limits on state power; and of resistance to the runaway
state.

Left to its own devices, gold is the ultimate
barometer of public confidence in government. It is also the
ultimate means for ordinary citizens to opt-out of an oppressive,
fraudulent system.

That is why gangsters who wield power in the
name of the people always make ownership of gold
a crime. So it was in France during the Revolution, in Germany
during the Nazi era, in Russia during the Soviet era, in China
during Maos rule, and in the United States from 1933 through
1974. It is why, even during periods when the ownership of gold
is not outlawed, its price is governed, as one commentator
puts it, or officially manipulated, as others of us put it.

Its often hard for practical men of
affairs to understand the vehemence of those of us who assert,
seemingly ad nauseam, that gold is money. The truth is,
our passion has more to do with the concept of liberty than with
that of money. We know from history and experience that once
the free market has lost control over the definition and creation
of money, individuals have lost their liberty.

Thats why neither a central bank nor
fiat money find support in the Constitution of the United States,
and why our monetary system, which has these two elements as
its very foundation, is unconstitutional on its face.

Its also why, as we rebuild our institutions
from the wreckage of the final monetary collapse, control over
money must at all costs be kept away from government. It is not
enough that gold return as money; government must keep its hands
off.

Money must be real, tangible, circulating.
As Mises wrote when considering the subject of monetary reform
back in the 1950s, Everybody must see gold coins
changing hands, must be used to having gold coins in his pockets,
to receiving gold coins when he cashes his paycheck, and to spending
gold coins when he buys in a store. And Im sure he
would have added an approving reference to digital gold had the
technology then existed.

Now, just to be clear, people must be free
to choose whatever they want to use as money. We believe they
will choose gold, given a chance, simply because people have
already done so over thousands of years, and for very good reasons.

But creating the conditions within which an
informed choice can be made, even  or perhaps especially
- after the collapse of the system and the discrediting of its
false ideology, will be extremely difficult.

We are beset by propaganda, falsehood and
spin from all sides. Truth is of no consequence; the Fed has
bought and paid for virtually the entire economics profession
in the United States.

Our universities are riddled with apparatchiks
who at the very least must toe the party line to advance in their
careers, and in many cases are directly dependent on Fed largesse.

The financial press, now concentrated in ever
fewer hands, is captive to the same false dogma, and is little
more than an apologist for the current monetary regime.

We desperately need credible new sources of
information on money if we are going to have any shot at a sustainable
regeneration.

In this connection, I have reason to hope
that from the talent assembled here this evening, we will see
a new initiative in the very near future. Stay tuned.